John Reid, the Defence Secretary, said today that Britain would not "cut and run" from Iraq despite heightened tension in the southern city of Basra, where two SAS commandos had to be rescued by their colleagues earlier this week.

Mr Reid was speaking after emergency talks with Ibrahim Jaafari, the Iraqi Prime Minister who visited London this afternoon on his way back from a UN meeting in New York.

But although Mr Reid kept to the clearly agreed line - that the events in Basra were just an isolated incident that would not affect relations - there were clear signs of splits within the Iraqi leadership that Mr Jaafari might find it difficult to paper over.

"Progress has been made but it is not irreversible. Freedom has to be won, often in defiance of those whose only method is terrorism and whose only objective is dictatorship," Mr Reid said at a joint press conference in Whitehall.

"Our strategy remains the same. We will not cut and run, we will not leave the job half done and we will stand by Iraq when times are tough. We will be a committed friend, not a fair weather friend."

A senior military source has told The Times that British troops stormed the police compound in Basra on Monday night because they feared that the two SAS soldiers, captured after a shoot-out with an Iraqi police patrol, were in danger of being summarily executed.

The UK force used Warrior armoured fighting vehicles to smash through the wall of the compound - although the action appears to have been largely a diversion for a simultaneous SAS assault on a nearby villa where the two men had already been taken by local militiamen.

The rescuers, from the same squad as the two captured men, used plastic explosives to blow out the doors and windows of the suburban villa before hurling stun grenades at the militamen guarding the two commandos.

But Baqir Solagh Jabr, the Iraqi Interior Minister, disputed the British Army's account. He told the BBC that the two British soldiers never left police custody or the jail in Basra, were not handed to militants, and that the British army acted on a "rumour".

Tensions were still high in the southern city this morning after the death in hospital of two civilians wounded in Monday's clashes between UK forces and an angry mob. The deaths brought the civilian death toll to five.

Around 500 demonstrators, including many police officers in uniform, gathered outside Basra police headquarters, shouting "No to occupation!" and carrying banners demanding that the two SAS men - accused of killing an Iraqi police officer before their capture - be tried in Iraq as terrorists.

The demonstrators handed in a list of demands to police headquarters, including the soldiers’ return, compensation for damage to the police station in the raid and the resignation of Basra’s police chief - who they accused of being a British agent. UK troops who patrol the port city kept out of sight during the demonstration.

Monday's events demonstrated the extent of a problem that had already become clearer in recent weeks: that Basra's police force has become heavily infiltrated by local Shia Muslim militiamen loyal to the firebrand cleric Moqtada al-Sadr.

Dr Mouwafak al-Rubaie, Iraq's National Security Adviser, confirmed as much on BBC Two's Newsnight yesterday: "Our Iraqi security forces in general, police in particular, in many parts of Iraq, I have to admit, have been penetrated by some of the insurgents, some of the terrorists as well.

"I can't deny this. We are putting in place a very scrupulous, very meticulous vetting procedure in the process of recruiting a new batch of police and Iraqi army, which will, if you like, clean our security forces as well as stop any penetration in future from the insurgents and terrorists."

Mr Reid today again praised the "swift and decisive" action of the British forces in Basra, although Mr Jaafari, a veteran Shia Muslim leader who was exiled under Saddam Hussein, declined to comment, saying that he was still waiting for a full report into the explosive events.

Instead, Mr Jaafari praised the continuing development of Iraq's security forces, and said all branches of his Government were working together with the US-led coalition against the insurgent threat. He said: "We have one enemy, it is our enemy and yours at the same time - it is terrorism."

Colonel Bill Dunham, the chief of staff for the Multinational Force in Basra, said today that the problem of insurgents infiltrating the Iraqi security forces was "something that affects the Iraqi police across Iraq as a whole".

"We will be looking to work with the Iraqi authorities to address this acknowledged problem and take the issue forward."

Colonel Dunham told BBC Radio 4's Today programme: "We are aware of rogue elements in the Iraqi police service. The trick that we have to pull off now with the Iraqi authorities is to identify those elements, to weed them out and to reinforce the good parts of the Iraqi police service."

The capture of the two SAS men on Monday came just a day after British forces in Basra arrested two leading members of the outlawed Mahdi Army, which is loyal to firebrand cleric Moqtada al-Sadr and is widely believed to have heavily infiltrated the local Iraqi police.

The two arrested men from the Mahdi Army were the group's Basra area commander, Sheikh Ahmad Majid al-Fartusi, and his aide Sajjat al-Basri.

One Iraqi member of parliament said that following the arrest of the SAS men, the Mahdi Army had tried to take them hostage to exchange them for its two leaders.

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